“After considering the bank’s reply to the show-cause notice, oral submissions made during the personal hearing and examination of further clarifications/documents furnished by the bank, RBI came to the conclusion that the aforesaid charge of contravention of provisions of the Act was substantiated and warranted imposition of monetary penalty," it said in a press release on Friday
On 23 July 2020, Bloomberg reported that RBI had sought details about HDFC Bank’s probe into the irregularities in its vehicle finance division. The complaint pertained to the customers of the bank being forced to purchase a vehicle tracking device for about four years ended December 2019, in a possible breach of guidelines that prohibit banks from non-financial businesses. HDFC Bank executives, including the auto loan head Ashok Khanna, had pushed auto loan customers to buy GPS devices costing ₹18,000-19,500 from 2015 to December 2019.
Aditya Puri, the then managing director and chief executive officer of HDFC Bank, told shareholders at the annual general meeting that after receiving a whistleblower complaint, the bank conducted an internal investigation into the car loan business and took disciplinary action against employees who were found to have been involved in “personal misconduct".
Following this, two US-based law firms—Rosen Law Firm and Schall Law Firm— filed class-action suits against the bank on behalf of shareholders.
Last year, RBI ordered HDFC Bank to freeze new digital banking initiatives and fresh credit card issuances. The regulator’s action was triggered by frequent outages in HDFC Bank’s digital services over the last two years. The ban put the bank’s digital expansion plans on hold. It had planned several launches under its Digital 2.0 initiative.
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